Health Insurance Premiums Top $15K for Family of 4

Health insurance premiums for employer-sponsored health insurance posted an unexpected increase in 2011 according to the Kaiser Family Foundation/Health Research & Educational Trust 2011 Employer Health Benefits Survey released Tuesday.

The average annual premium for family coverage increased by 9% to $15,073 in 2011. The growth rate was 3% in 2010. Premiums increased significantly faster than workers' wages (2.1%) and general inflation (3.2%). Since 2001, family premiums have increased 113%, compared with 34% for workers' wages and 27% for inflation.

Expect finger pointing to begin in earnest among the usual cost drivers: hospitals, health plans,  and physicians.

Helen Darling, president and CEO of the National Business Group on Health, a nonprofit that represents large employers on healthcare issues, cautioned against assigning responsibility for the premium increases to any single component of the healthcare industry. "Everything contributes," she said noting that Americans pay about $20 billion annually for unnecessary services.

"At NBGH we talk to stakeholders all the time and everyone has their own ideas about what drives healthcare costs," Darling stated.

Darling said hospitals often point to labor and imaging as cost drivers while physicians say the insurance payment system itself drives up their costs of doing business. "They say they can't make a living talking to their patients or taking their histories because health insurers won't pay for that. They are paid by insurers to order and run tests."

Some employers said they increased their costs to prepare for increased utilization. Beth Ward, CFO of Wellmont Health System in Kingsport, Tenn. reported that her company, which self-insures, raised its expected costs by 5% "given expected increases in utilization -- particularly associated with drugs and chronic conditions -- even with our management of diabetes and coronary disease efforts."

She noted that because there are more non-paying patients, the reimbursement increases that hospitals receive from the insurers are going toward covering the costs of the uninsured. "It's a hidden tax on all of those that still have coverage."

The 13th annual Kaiser survey included 3,184 randomly selected public and private firms with three or more employees. The survey was conducted from January to May 2011.

This year some survey questions were specific to the Affordable Care Act. Writing for the White House blog, Nancy DeParle touted survey findings that she says demonstrate that health reform is already working.

The assistant to the president and deputy chief of staff pointed to the 2.3 million young adults under age 26 who were added to their parents' health insurance plans. DeParle also noted that 23% of workers were in plans that decreased their preventive care cost-sharing due to the ACA while 31% of workers are in plans that changed the list of preventive services due to health reform.

Other findings from the 2011 study include:

• Premiums for worker-only health insurance coverage increased 8 percent to $5,429 annually with workers paying an average $921 toward the coverage.
• The share of companies offering health insurance to their employees remained steady at 60%.
• Some 31% of covered workers are in high-deductible health plans with deductibles of at least $1,000; another 12% face annual deductibles of at least $2,000.
• Average copayments for in-network physician office visits are $22 for primary care and $32 for specialty care.
• Average pharmacy copayments for three- and four-tier drug plans are $10 for generic drugs, $29 for preferred brand-name drugs, $49 for non-preferred brand-name drugs, and $91 for specialty drugs.
• The share of companies with more than 200 workers offering retirees health benefits to their employees remains steady is 26%. That's unchanged from last year and down significantly from 32% in 2007.